Brexit and the life sciences industry – where are we now?

23 January 2018

Following six months of hard negotiations, an agreement on the terms of the UK’s exit from the European Union has finally been reached and on the 20th December a joint report setting out commitments to be reflected in the Withdrawal Agreement was published.

Whilst those negotiations have been happening at inter-governmental level there has also been much activity within the life sciences industry itself. With the announcement that the European Medicines Agency will be relocating to Amsterdam and confirmation that the UK will not contribute to the agency’s future relocation costs. Also large PharmaCos have started to execute their own Brexit strategies.  For example, and critically, AstraZeneca and Eisai are now duplicating their testing and approval procedures elsewhere in the EU to ensure market access and business continuity after March 2019. Similarly, GSK is estimating to spend up to £70m on their preparations for Brexit.

Despite the recent developments in the negotiations there are still many unanswered questions facing the life sciences industry which are key to their post-Brexit planning.

  •     How will the MHRA and EMA work together to approve medicines sold in the UK and the EU?
  •     How will future customs arrangements affect lead times for the supply of medical products?
  •     Will quality and testing facilities need to be duplicated for products sold in the UK and the EU?
  •     Will there be a transition period and how prepared should companies be prior to March 2019?

For medicine regulation the industry believes that a best case scenario would be to establish a ‘mutual recognition’ arrangement with the EU, accepting that UK regulation is equivalent to that developed by the EMA. The ‘Canada Plus Plus Plus’ model and the ‘Norway Minus’ both rest on these models of regulatory equivalence. However, the UK Government is also exploring the possibility of regulatory divergence, with a view that certain sectors could gradually break away from EU regulations. The MHRA has recently announced that it intends to secure an implementation period for any regulatory changes, but we will know more later this year when the UK and EU’s position on this is likely to be formally published.

The concept of a transition period is now widely accepted by both sides, however the details are not. The UK Government has outlined a desire for a ‘status quo’ transition in order to bridge the gap between leaving the EU and starting a new trade relationship. The European Council has also released its own guidance, stating that the UK may be able to keep its current benefits but with no decision making rights and being required to adopt new EU laws.

It is expected that during this time a more detailed trading framework based on principles agreed in the earlier negotiations will be developed. This would be welcome as it would allow companies time to move their market authorisations as well as  set up new manufacturing and quality testing/certification operations where required.

The risk of a ‘no deal’ scenario remains which would lead to the adoption of WTO rules and forced regulatory divergence. This would have the potential to disrupt access to medicines across Europe. We would hope that the ‘common sense’ approach that led to the agreement around Northern Ireland would be extended to ensure resolution of this issue.

The good news is that, despite the uncertainty surrounding Brexit, there are still strong signals that the UK remains one of the best places to undertake research and development and to manufacture new products. For example, Novo Nordisk have recently unveiled plans to invest £115m in a new UK research centre, GSK have announced that they will invest £140m in updating its UK manufacturing network and MSD are planning to establish a UK Discovery Centre and potential new EU HQ in London. Furthermore, Qiagen have announced a partnership with Health Innovation Manchester to develop a genomics and diagnostics campus.

There has undoubtedly been progress, but the next 12 months will prove to be critical as we seek to get clarity on what a future trading relationship, regulatory environment and transition period will look like. The upcoming negotiations will be more complicated than those previously, with topics that are arguably more politically and economically sensitive. Working alongside the industry we will be assessing the opportunities and implications for UK Life Sciences. Look out for more blogs on this issue.

If you would like to know more about the impact of Brexit on the pharmaceutical industry please see our Brexit brochure or reach out to one of our Brexit specialists.

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